The scheme is an Australian Government funded initiative. As of 1 July 2024, it provides for a legal entitlement of 22 weeks (110 days) paid parental leave for the family, of which 2 weeks (10 days) are reserved for the partner. The family will decide how to share these days. This leave is paid at the minimum wage rate (e.g. from 1 July 2024 = Parental Leave Pay is $915.90 per week, or $24.10 per hour, before tax. This is based on the weekly rate of the national minimum wage, which usually changes each financial year.)
When an employee makes a claim, Services Australia will assess the claim and advise you of the outcome. You will need to either accept or request a review of the decision. If you accept, you will be asked to provide or confirm your details and set up Payment Destination information.
For more information on the Paid Parental Leave scheme, please refer to the information below:
Further information on Parental Leave and the workplace can be found on Fair Work:
The Australian Government introduced changes to the Paid Parental Leave scheme, which will affect employees and employers. These changes will be effective from 1 July each year until 1 July 2026. Please see the link below for details of the changes.
Processing within WageEasy:
Parental Leave is not a leave entitlement, but rather complements any obligation an employer may have to their employee under their existing industrial instrument. Due to the specific treatment of payment calculations in relation to tax, superannuation, leave accruals, payroll tax, and WorkCover levy, two setup options are available in WageEasy. You should select the option that best suits your overall practices. The following items should be considered before selecting your options:
If the employee is normally linked to a pre-defined timesheet, you should remove this link from Employment, Timesheet.
If the employee has any standard allowances that are normally paid as part of their work (eg, Uniform Allowance) these may not need to be paid whilst the employee is receiving Paid Parental Leave, so make these inactive at Payments, Allowance.
Check with the employee to see if any regular disbursements or tax adjustments need to be applied to the payment.
As these payments are excluded from calculations relating to liability for Payroll Tax and WorkCover levies, ensure that the necessary changes are made to your existing practices.
Note: Employees do not accrue Annual Leave and Sick Leave; however, Long Service Leave may accrue, depending on the State legislation and Award conditions whilst receiving Paid Parental Leave.If these payments need to be posted to a specific account in your General Ledger system, make sure this is taken into account in your setup within WageEasy.
Confirm if payments are to appear against the employee’s default departments for transfer to the general ledger and display on Departmental reports.
Option 1 - Allowance
Set up an allowance in WageEasy with the Taxed box ticked. Do not tick Include in Super Calculation, and do not tick Include in SG Gross.
Link this payment in the employee file under Payments, Allowance, Add.
This will be displayed on the payslip as Paid Parental Leave under Additions/Deductions:
Option 2 – Leave
Set up a new Award:
Setup, Awards, Add, Next
Type Parental Leave (this is the name of your new award, any name will do), Next.
Tick the box Copy Existing Award File and select an award you would like to copy from, Next.
Tick the box Details Correct, Next, Finish.
Once the new award is created, add a new Leave Type for Parental Leave.
Leave, Add/Delete Leave, Next, and select Add new leave type, Next.
Enter a meaningful name for the new Leave Type (i.e. Paid Parental), and also add this name to Description and Short Description, and select Next.
Once the new leave type has been created, go to the Accruals tab of the new Parental Leave, double click the line that starts with Any days greater than 0 and change the Calculation Type to Per Pay and the Rate to i.e. 38 (the number of hours per pay).
On the Accrual Conditions tab, Set Maximum accrued hours to 836 (38 * 22 weeks), (or 760 for 20 weeks), and tick the Leave accrues during periods of Leave without Pay option:
On the Payments tab, tick the box Payments can be edited at Wages Processing and modify the Payment Conditions, Payment Method: Use Standard Pay Rates, Pay Rate Loading: 0.00%, and Loading Method: Add to Base Rate.
On the Auto Payments tab, tick Pay Accrued Leave Out Each Pay.
When using the new leave type, it will display as leave on the pay slip.
When using this method (Option 2), remember to link the employee to this new award, and you need to create and link the employee to a new pay rate of $24.1026 per hour within the employee file under Employment, Department Pay Rate.
Note: STP2 setup for both options is the same
Reporting Group: Paid Leave
Reporting Subgroup: P-Paid Parental Leave
Other considerations when using this option:
If the employee is only receiving the Paid Parental Leave payment (i.e., is not concurrently receiving any other leave entitlements), consideration should be given to halting the accrual of Annual, Sick Leave entitlements, Long Service Leave may accrue depending on the State legislation and Award conditions. This can be achieved through placing the employee on a newly created Maternity/Paternity Leave award.
As allowances are reported separately in WageEasy’s General Ledger export, ensure these are identified and set up accordingly.
If you use any existing user defined reports or templates to calculate payroll tax and/or your WorkCover levy, you may need to make amendments to these reports.
Set up a limit within the employee’s file to cap payments at ($18318.00) 20 * $915.90, this step is optional, and you might want to leave this blank if you do not know how many weeks of Paid Parental Leave the employee is getting. However, take into consideration this value may increase (in line with adjustments to the minimum wage) if the employee is receiving payments post 1 July 2024, or if the employee is connecting the 20 week Paid Parental Leave period to the 2 week Flexible Paid Parental Leave days which will then be a total of 22 weeks.
Set a reminder within the employee file to appear on the To Do List to notify you of the final payment date.
Conclusion
Under the Paid Parental Leave scheme, Australian employers are required to make payments to all eligible employees. It is important for employers to consider how best to administer the payments. To avoid payment delays, consider registering details early with the Family Assistance Office.